VietNamNet Bridge - Behind the flashy success of Imex Pan Pacific (IPP), the largest trader of high-end fashion brands in Vietnam, are interesting stories about the business life of Jonathan Hanh Nguyen and his family.

Jonathan Hanh Nguyen.

The media refers to IPP President Jonathan Hanh Nguyen as the “the king of hi-end fashion” because IPP currently distributes 38 leading fashion brands like Burberry, Chanel, Versace, CK, Salvatore Ferragamo, etc.

This corporation is also the distributor of wine brands as Moet-Hennessy and Camus and franchise fast-food brands as Burger King, Domino's Pizza, and Illy Café in Vietnam. IPP accounts for over 40% of the market for hi-end and luxury goods in Vietnam and up to eight of the top 10 luxury brands.

Impossible mission

In the 1980s Vietnam aviation sector flew only to Moscow and Bangkok – the two single aviation gateways for Vietnam to the world.

On September 9, 1985, Philippine President Ferdinand Marcos approved the opening of the HCM City - Manila air route after two years of negotiation with Vietnam. On September 9, 1985 Vietnam Airlines made the maiden flight from HCM City to Manila. 

The one who took great merit for clearing this impasse is a Vietnamese American businessman Jonathan Hanh Nguyen, who was born in 1951 in Nha Trang and then settled in the US and the Philippines.

In the 1980s, Hanh Nguyen, with American nationality, was a financial inspector at Boeing Subcontractors. Hanh Nguyen had close ties with Philippines Airlines and his first wife was the niece of President Marcos.

The opening of the HCM City-Manila air route was difficult, and it was even more difficult to maintain it.

The flights from the Philippines to Vietnam carried humanitarian aid, medicines and gifts sent by overseas Vietnamese to their relatives in Vietnam. But the flights from Vietnam to the Philippines were empty. Hanh Nguyen and the 11 crew members were the only passengers.

During two years of maintaining the route, Hanh Nguyen said he got losses of up to $5 million, but the airline industry of Vietnam in return welcomed more good news from the Vietnam-Philippines aviation agreement.

Building empire of hi-end fashion goods

Trang Tien Plaza.

Although he got lost from the HCM City-Manila air route, it opened an opportunity for Hanh Nguyen’s later business.

Thanks to the opening of the route, eight members of his family were exempted from visas for Vietnam, which helped them bring goods from the Philippines to Vietnam.

Hanh Nguyen established IPP in the Philippines in 1985 to take advantage of business opportunities from the flights between the Philippines and Vietnam.

He started selling branded fashion goods at a duty-free shop at Tan Son Nhat Airport, HCM City, the "reward" for his contributions to the opening of the Ho Chi Minh City - Manila route in 1985, when Vietnam was not yet open.

However, this store did not yield a profit because the number of international flights at that time was too small. Also, it took foreigners up to 60 days to get an entry visa to Vietnam and up to six months for an exit visa. The number of foreign tourists was only a handful.

This duty-free shop did not bring about profits, but offered him the opportunity to build relations with hi-end fashion brands in the world, which was the start for his later business.

Apart from the duty free shop at the airport, Hanh Nguyen was also a pioneer entrepreneur in the business of duty free stores at the border gates between Vietnam - Laos, and Cambodia and China.

However, after 20 years, when Vietnam joined the World Trade Organization (WTO), IPP sold high-end fashion products in the domestic market, with the first shop located inside Rex Hotel in Ho Chi Minh City, with the participation of numerous brands like Chanel, Louis Vuitton, Burberry, Salvatore Ferragamo, Cartier...

He said only when Vietnam opened its doors and developed to a certain level, when the number of international passengers through the domestic airports exceeded 2 million people each year, partners allowed him to open stores at the airport.

Trang Tien Plaza in Hanoi is the next emphasis of Jonathan Hanh Nguyen. For the first time Vietnam has a business center selling only top luxury global brands.

Hanh Nguyen said he spent $20 million for the "appearance" of Trang Tien Plaza. Each luxury stall here was invested an additional of $4 million for the design, decoration and commodities.

However, Trang Tien Plaza was not a smooth deal for Jonathan Hanh Nguyen. Despite the huge investment and its prime location, this shopping mall was very quiet for a long time. After more than a year of opening, Trang Tien Plaza temporarily closed for four months for restructuring and it re-opened in late 2014.

According to Hanh Nguyen, hi-end fashion business in Vietnam requires huge investment while the economy is now at a tough period. Plus there is intense competition among distributors, and counterfeit and pirated goods.

"In Vietnam, the luxury tax rate is still at 30-40%, so we are lucky not to get a loss if you sell authentic branded goods without tax evasion," he said.

He said that IPP could survive in the difficult context thanks to the support of partners, who have cooperated with IPP for over 20 years.

Hanh Nguyen’s business career can be divided into three phases. In the first phase, he focused on diversified businesses, including exports of rattan and bamboo products from Vietnam, production of zippers and building a 14-storey hotel, the tallest in the coastal city of Nha Trang at that time.

Entering the second phase, along with the attachment to the airline industry, Hanh Nguyen and his family began supermarket and duty-free shop business. The popular supermarkets in HCM City and southern Vietnam such as Citimart, Maximark, Binh Dan and Mien Dong were launched and operated by his family in the early '90s. Citimart and Maximark were developed by his two sisters, Nguyen Thi Anh Hoa and Nguyen Anh Hong.

Besides duty-free shops at Vietnam's airports, Hanh Nguyen also developed a network of duty-free shops at the border gates of Tinh Bien, Moc Bai, Lao Bao, Lao Cai, and Dinh Ba.

The introduction of hi-end fashion products at duty-free stores at airports was the “launching pad” for Hanh Nguyen to become the “king” of the hi-end fashion empire in Vietnam later, when foreign partners desired to deeply enter the Vietnamese market.

Inside the Trang Tien Plaza shopping mall.

The third phase in his business career is hi-end fashion and franchising business. Hanh Nguyen benefited a lot from the booming of the Vietnamese stock market in 2007-2008. But this business is not easy since it requires huge capital.

For example, to get the right to distribute Chanel products in Vietnam, he had to commit to investing $4 million, including $2 million of equipment for a 200m2 store. And the store must be renewed annually.

He also had to purchase goods in the form of pre-paid mode twice a year. The risk was quite big as of 100 models, only 30 sold well. 

According to Forbes, in 2014, IPP’s hi-end fashion business reached the gain/revenue rate of 5%.

Hanh Nguyen said all of his family members are involved in business. His wife Le Hong Thuy Tien was selected by Forbes as one of the outstanding female entrepreneurs of Vietnam in 2015. His four sons are managing four companies and they are the four pillars of IPP.

Hanh Nguyen said he was influenced by his father, a successful businessman in Nha Trang before 1975.

His father was a tailor who then became a medicine trader and was involved in insurance, banking, wood exports … As a high school student, Hanh Nguyen assisted his father in business.

This businessman’s formula of success is applying the basic knowledge of school to the school of life and building a roadmap for the life of a business.

Opportunities from TPP 

Once the Trans-Pacific Partnership (TPP) agreement takes effect, import taxes on luxury goods will sharply decline, so Nguyen was very excited with the end of the TPP negotiation on October 5. He said IPP would open 2-3 big outlets selling discounted branded goods in major cities in Vietnam.

“At that time, my goal is not $1 billion of revenue anymore, and that number it just a minimum level. Millions of Vietnamese will have the opportunity to own branded products at an affordable price," he said.

Nguyen revealed that IPP is expected to open a branded shopping mall in HCM City, twice as big as Trang Tien Plaza in Hanoi.

Compiled by Linh Nhat 

Zing/TTVN/Cafebiz